Some companies choose to manage payroll tasks internally using manual bookkeeping or do-it-yourself payroll software, but other business owners have evolved to embrace the experience of a specialized payroll provider. The amount of time and funds needed to accomplish crucial payroll duties frequently plays a significant role in the decision to outsource this function.
According to a recent Paychex survey, 21% of payroll users mentioned the time it takes to manually process payroll, 25% expressed concern about staying up to date on tax laws and regulations, and 16% voiced concern about managing taxes, withholdings, etc. for employees working in different locations.
Contemplating whether payroll outsourcing could benefit your business? Busy entrepreneurs are increasingly opting to outsource these tasks because they can be time-consuming and difficult yet are nonetheless necessary.
In this blog, we will talk about some significant advantages of outsourcing your payroll, areas of your company where a provider could be able to assist, and how this strategy might make sense for your company.
What is Payroll Outsourcing?
A typical firm offers a variety of products, services, and operations. There will be some of them that are relevant to the specific company in consideration (e.g., only businesses which are customer-facing will have a customer service department). However, several procedures are applicable to almost any type of business. For example, any company that employs people has a payroll process.
These tasks can be performed in-house or by a third party. Outsourcing is the practice of a company hiring a third party to perform a service. Payroll outsourcing is among the most popular kinds of business process outsourcing.
Be aware that a hybrid model is also an option, where some tasks are completed internally and others by a third party. This is sometimes referred to as "payroll co-sourcing," which is the payroll term for "co-employment." Payroll outsourcing may occur within the country (domestic payroll processing), or internationally (global payroll processing).
Common Payroll Functions Can Be Outsourced
Payroll is more than simply "one" straightforward task. It is a collection of actions carried out simultaneously. Payroll outsourcing often involves outsourcing the following tasks:
- Setting up a payroll account for employees. To process the person's payroll, all relevant personal data is collected.
- Setup of a payment mechanism. It is decided on the preferred form of payment for the business, whether that is by direct deposit, automatic payments, or paychecks.
- Withholding of all relevant income and payroll taxes.
- Payroll tax payments to the tax division. Remember that even when this is outsourced, it is typically still the employer's responsibility to pay any owed taxes rather than a third party. Employers should be aware that even if something is outsourced, they will typically still be responsible for making any necessary payments.
- Managing any necessary employee deductions, including those for workers' compensation and health insurance, and documenting them on the employee's paystub.
- Taking care of any year-end tax forms and declarations.
Reasons You Should Invest in Payroll Outsourcing
1. Cut Down Overall Costs of Hiring
Payroll outsourcing frequently costs a company less than doing it internally. Purchasing the required computer hardware, accounting or payroll software, and offering training are all necessary when processing payroll internally. By outsourcing, you can lower the total cost of hiring and training an expert, which lowers the audit cost. They take care of all the jobs at once, so you don't have to continually train new hires to do the same.
2. Ensure Regulatory Compliance
One key issue in payroll is rule and protocol compliance. Payroll processing outsourcing companies are committed to their work and keep up with all regulatory regulations. This does not violate legal requirements, and you are immune from legal repercussions. Additionally, it keeps you regularly informed of new government regulations and can prevent all types of IRS fines, which can save you a lot of unnecessary expenses.
3. Improve Efficiency of Payroll Processing
The newest payroll software and technologies are now available with outsourcing organizations, enabling them to manage all data quickly and efficiently. They frequently ensure end-to-end data optimization and boost system security because they are aware of the most recent developments.
4. Reduce Technology Costs
Businesses frequently employ technological solutions to ensure accurate data for payroll management. Both the system and its users need to be maintained, and individuals also need to be trained to operate it. The outsourcing company gently seizes all of this unnecessary labor, saving the business money and time.
5. Optimize Payroll Operations Efficiency
The payroll processing outsourcing company effectively manages all of the tasks involved in processing payroll. These businesses regularly optimize their processes, enable real-time monitoring and inspections to assure 100% accuracy, generate reports automatically, and conduct technology-enabled audits to increase their productivity.
6. Increase Data Security
Any company's database is susceptible to threats and risks from data leaks and phishing assaults. Outsourcing companies for payroll processing are capable of doing this effectively. To stop phishing and fraud, they regularly enhance their security. For maximum security and confidentiality, their systems are heavily encrypted. To safeguard the data and build solid credibility, these procedures are effectively checked.
7. Custom and Accurate Payroll Processing
All state rules are well-known to and regularly updated by outsourcing companies. They collaborate with numerous businesses globally while staying on top of all legal standards. This guarantees that businesses get accurate payroll for various locations. Even better, you can have this tailored to your requirements.
8. Prioritize Core Business Functions
Payroll is not likely to be a key aspect of your company's operations. Since it is a non-core function, any time and resources spent on it will reduce the amount of time you should dedicate to tasks that generate revenue. You can better utilize your time in tasks that are more directly related to your core competencies or sources of revenue by handing over the processing of your payroll to a professional. Examples of such tasks include customer support, sales, and marketing.
9. Access to Top Talent
Working with an outsourced staff gives you access to their years of experience. If you work in numerous jurisdictions and want a specialist who is knowledgeable about all local norms and regulations, this instant access is extremely crucial. Employees with in-depth knowledge of payroll laws and regulations, particularly tricky payroll tax matters, are hired by outsourced payroll service providers.
Build Your Payroll Team Today
VirtualStaff.ph offers all the features and options you could ask for. Want a customized team built specifically for your business requirements? Want to select a couple of staff on a part-time or full-time basis? You’ll be able to fulfill all your changing HR needs with the use of VirtualStaff.ph.
Below are the options that you will get using VirtualStaff.ph:
1. Standard plan
Using the VirtualStaff.ph’s standard plan, you get the option to scroll through the endless profiles of highly-qualified staff, contact them, conduct interviews, hire them, and pay them by tracking the hours they worked, all from within a single dashboard.
Below are the features that you get:
- Post unlimited jobs: Looking to hire multiple employees for various positions? Create unlimited job postings and receive applications from staff that match your criteria.
- Message applicants: Reach out to qualified candidates and discuss job requirements.
- Send job offers: Reach out to candidates with tailored job offers.
- Hire unlimited employees: Build an entirely remote team by hiring as many applicants as you want to.
- Track hours worked: Use the time-tracking software absolutely for free to track the hours your staff has worked and calculate payment accordingly.
- No payment processing fee: Doesn’t matter where you reside, pay your workers securely within VirtualStaff without incurring any payment processing fee.
- Customer support: Reach out to the team in case of any queries via live chat, email, or messenger.
2. Enterprise plan
Recruitment, payroll, compliance, legal protections - everything is taken care of when you choose the enterprise plan. An entire HR team will be created for you in three simple steps:
1. Tell your recruitment goals: What type of staff do you need? What skills do they need to have? Mention all your requirements, and a dedicated client success manager will help you decide on the best options.
2. Choose the best staff: The team will choose the best staff, conduct preliminary interviews, and set up final interview rounds with the best applications according to the goals you mentioned.
3. Onboard your new staff: Seamlessly onboard the new staff you selected, with your client success manager facilitating the entire process.
Below are the features that you get using the enterprise plan:
- Recruitment specialist: The talent acquisition team will search for the best staff based on what you need.
- Legal protections: Before sending the employees to work for you, we onboard them with our Philippine entity to protect you. This enables us to offer you additional legal safeguards that you might not otherwise have.
- Client success manager: You get your own personal experienced success manager to help you make this process a long-term success.
- Simple pricing: The amount you pay includes everything from staff salary, management fee, payroll, and all legal compliance.
- Staff monitoring: Your client success manager will keep track of the hours your staff work and guarantee that you never pay for any time your staff doesn’t work.
- Peace of mind: You will have the full weight of Virtual Staff behind you to make offshoring to the Philippines a long-term success.
So, are you ready to get started? Build your remote payroll team by outsourcing to the best platform! Talk to an expert now!
